The new dynamics of East Asian regional economy: Japanese and Chinese strategies in Asia

The Japan-led flying-geese pattern of economic development has become obsolete as an accurate description of the pattern of economic relations in East Asia. Meanwhile, the rise of China as the world's production platform has become the most significant factor in transforming the East Asian regional economy. Although the Asian financial crisis served as a major catalyst for the emergence of ASEAN+3, the China factor looms increasingly important in the subsequent development of East Asian regionalism. Despite its enhanced position in the region, however, China's new role in East Asia is clearly different from the role that Japan played at the zenith of its economic prosperity. While Japan's economic engagement in Asia was based on economic penetration by Japanese multilateral firms, China's rapid growth is still predicated upon foreign capital and technology. China's strength lies in its ability to open up its economy for trade and investment. In trade negotiations with ASEAN, China has taken the lead, surpassing Japan, a country constrained by domestic politics. However, Japan remains an important partner for ASEAN countries, not only in providing financial and developmental assistance, but also in hedging against China's dominance.